23 Dec 2010 17:23

RUSAL calls Norilsk Nickel EGM to elect new board

MOSCOW. Dec 23 (Interfax) - UC RUSAL is convoking an extraordinary meeting of shareholders in MMC Norilsk Nickel to elect a new board of directors due to concerns about a proposed deal to sell quasi-treasury shares to Dutch commodities trader Trafigura, the Russian aluminum giant, which owns a blocking stake in Norilsk, said in a statement.

"RUSAL has significant concerns with regard to the disposal by the Norilsk Nickel management of the American Depositary Receipts (ADRs) accounting for approximately 8% of Norilsk Nickel's shares to Trafigura Beheer BV. This transaction is in line with an extensive media campaign focusing on the formal proposal from the management of Norilsk Nickel to purchase MMC's shares owned by RUSAL. RUSAL believes that Norilsk Nickel's management is trying to divert RUSAL and other shareholders' attention from the transaction with Trafigura," RUSAL said.

"The agreements upon the sale of ADRs were concluded by the management of MMC without the approval of the Board of Directors. The members of the Board lacked information regarding the transaction including the terms and structure of the transaction and the price at which the disposal was undertaken. RUSAL believes that such transactions should be concluded by subsidiaries of MMC only upon approval by the Board of Directors. An asset worth over US$3.5 billion was monetized without approval by the Board of Directors contrary to the regular corporate governance practices."

"It cannot be excluded that Trafigura is not a final buyer of the ADRs and purchase could be financed via favourable funding pertaining to Norilsk Nickel and/or Interros. Also, it is possible that the transaction represents a non-cash transaction without any further proceeds to the company, which has been also confirmed in the MMC's press-release where it was stated that Trafigura entered into a lock-up pursuant to which it undertook not to sell the MMC Norilsk Nickel ADRs acquired in the transaction to a non-affiliated third party until after the June 2011 AGM."

"These conclusions were drawn following opinion expressed by leading independent experts with regards to Trafigura's incapacity to raise the amount needed for closing the transaction."

"Moreover, the agreements may contain clauses on various options, as well as Trafigura's obligation to act and vote in the interest of the management of MMC, allowing the latter to keep effective control of 8% of the votes at an annual general meeting of shareholders. We believe that this transaction will circumvent the requirements of the Federal Law On procedures of foreign investments in the business entities of strategic importance to national defense and national security."

"Obviously, the management of MMC began to consolidate a stake in MMC using the company's balance sheet for their own purposes on the eve of the June 2011 AGM in order to ensure the election of a required number of the management representatives to the Board of Directors to block the replacement of the CEO of MMC, which, according to the Charter, requires a qualified majority of the elected board members.

"In this regard, RUSAL fears that in the near future the management of MMC may announce an additional purchase of their own shares by its subsidiary companies at the expense of the company's shareholders, but in the interests of the management with the use of veiled statements referring to an increase in the company's value. Today's interview of Mr Vladimir Potanin published in the Wall Street Journal which states Interros and MMC's management's intention to obtain a full control of the company and to deprive RUSAL and other minority shareholders of the company to influence the decisions taken is another confirmation to this."

"To prevent this process, RUSAL is proposing the removal of the existing Board of Directors, in which the vast majority is represented by the management of MMC and the representatives of Interros. This is to ensure the election of those who will not only strictly follow the standards of corporate governance that protect the rights of all shareholders, but also to contribute to the growth of the company's shareholder value."

"In its claim sent today to the Chairman of the Board of Directors of Norilsk Nickel, RUSAL requests Norilsk Nickel convene an extraordinary general shareholders' meeting for the removal of the actual Board of Directors and the election of new one, which will restore the balance in the interests of all shareholders, and in order to prevent similar transactions in the future."